First-time jobless claims increase by 10,000

A separate report on Thursday showed that the private sector added 215,000 jobs last month, well above the upwardly revised total of 148,000 in November, according to the ADP National Employment Report released on Thursday.

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Mark Zandi, chief economist at Moody's Analytics, said the report is positive but the job market, and the economy, aren't "out of the woods" yet.

Employers added 39,000 construction jobs, a positive sign for a sector that struggled during and since the recession ended in June 2009.

Another report on Thursday provided more positive data for last month as the number of planned job cuts fell for the first time in three months to the second-lowest monthly total of 2012.

Overall, the year ends with the lowest 12-month job-cut total since 1997, according Challenger, Gray & Christmas, a global outplacement firm.

The 32,556 job cuts announced last month were 43 percent fewer than the 57,081 November cuts and 22 percent lower than the same month a year ago.

Still, planned layoffs were up 33 percent in the final three months of the year from the third quarter.

Despite steady improvement in the labor market, the unemployment rate has remained persistently high, at 7.7 percent in November, and is likely to remain around that level for December.

With that in mind, Congress agreed to a one-year extension of federal unemployment benefits for the long-term unemployed.

Despite intense negotiations that missed a Dec. 31 deadline to resolve tax and spending issues, business continue to hire, a fact that perplexes Zandi.

Instead, businesses have pulled back on their investment spending, which is needed to spur more robust economic growth.

Business groups have said they would pick up activity if Congress and the White House could reach a "fiscal cliff" deal. But they expressed disappointment on Wednesday that the final agreement, cleared by Congress on Tuesday, came up short of the broader package they had wanted.